University of Wisconsin-Milwaukee Employment and Training Institute, January
2000

State of Wisconsin published reports on food stamps, medical assistance, AFDC and W-2 were
used to track monthly changes in caseload, the numbers of recipients and expenditures for the
period January 1996 through September 1999.

Declines in Numbers of Families Receiving AFDC and W-2 Income Support

The
monthly AFDC caseload in Milwaukee County remained at or above 35,000 cases for the period
1986 - 1995. Changes in the AFDC eligibility determination process and work requirements
under Pay for Performance were phased in during early 1996 and were responsible for much of
the caseload reduction in both 1996 and 1997 prior to W-2. The number of cases began a sharp
decline with a 21 percent reduction in AFDC caseloads during 1996 and a 22 percent reduction
in the first nine months of 1997 before W-2 began to be phased in.

During the phase-out
of AFDC, cases receiving AFDC payments for care of non-legally related children were moved
to Kinship Care and caseheads on SSI were moved to Caretaker Supplement (C-Supp) status.
By the end of 1997 the AFDC population consisted of 11,421 cases while W-2 payments were
made to 4,069 cases, Kinship Care cases totaled 1,564, and an estimated 1,400 SSI caretaker
cases received Caretaker Supplements.

The conversion to W-2 was phased in gradually
beginning in October 1997 through April 1998. By April 1998 W-2 cases receiving income
payments totalled 10,227 and AFDC payments were no longer made. One year later in April
1999, the number of W-2 cases with payments had declined by 33 percent to 6,876. By August
1999, the number of W-2 cases with payments had declined to 6,400 cases.

Fewer Food Stamp Cases

The decline in food stamp cases paralleled the AFDC caseload declines during Pay for
Performance up until W-2 began, as many cases closing on AFDC closed on food stamps and
medical assistance as well. In January 1996 there were 50,143 food stamp cases receiving $8.9
million in monthly benefits. Cases declined during Pay for Performance to 37,594 and then
stabilized at about 35,000 cases throughout much of 1998 and 1999 after the phase-in of W-2,
with benefits at about $6 million monthly.

Most of the decline in the total food stamp population consisted of a decrease in the number of
children on both AFDC and food stamps. In January 1996, 73,559 children were on both
AFDC and food stamps. This total declined by 42 percent to 42,320 in October 1997, just prior
to W-2. Meanwhile the number of children on food stamps and not on AFDC increased 26
percent from 9,092 in January 1996 to 20,549 in October 1997 as some former AFDC recipients
moved off AFDC but remained on food stamps. This resulted in a net decline in the number
of children receiving food stamps from 82,651 in January 1996 to 62,869 in October 1997, or
a 24 percent reduction. During the same period, the number of adults receiving food stamps and
AFDC declined 53 percent from 35,149 in January 1996 to 18,737 in October 1997, while the
number of adults on food stamps and not on AFDC increased, resulting in a net decline of 24
percent.

The number of Milwaukee County food stamp cases with reported earnings remained at about
10,000 cases throughout the 1996-1999 period. The average wages of cases with earnings rose
6 percent from $879 in January 1996 to $933 per month in August 1999.

Decline
in Medical Assistance Cases

Declines in the AFDC and food stamp populations resulted in declines in medical assistance
since eligibility for medical assistance was in most cases automatic if there were dependent
children on food stamps or AFDC and case closures on AFDC often resulted in closure of the
medical assistance group. Cases on medical assistance totaled 53,999 in January 1996 and
declined 22 percent by August 1999. Almost all of the decline occurred during Pay for
Performance prior to W-2, after which time the MA caseload stabilized at 47,000.

The number of children on medical assistance declined overall by 15,014 (or 17 percent) from
89,416 in January 1996 to 74,402 in August 1998. Notably, a three-fold increase in the Healthy
Start program offset the larger 35 percent decline in children on medical assistance in cases
which also received AFDC or food stamps as these cases moved from AFDC/medical assistance
to Healthy Start where children were eligible. The population of adults on medical assistance
declined 25 percent from 46,100 in January 1996 to 34,650 in August 1999 due primarily to
reductions in the number of families in the AFDC and food stamp population.

Historically, families on AFDC and food stamps were provided a considerable financial incentive
for being employed while on assistance. Families were allowed to deduct a portion of their child
care costs and to disregard up to one-third of their earned income in meeting eligibility
requirements for AFDC and determining the AFDC grant level. As a result, many employed
families could remain eligible for reduced AFDC payments and food stamp benefits and retain
their medical assistance coverage. In 1996 an employed single parent with three children (with
no unearned income or child care deductions) could earn as much as $1,600 per month and still
retain a food stamp allocation of under $100 per month as well as medical assistance for herself
and her children. If the parent had child care deductions, the family's food stamp allocation
could increase to up to $200 per month. By September 1999, the increased allowable wages
under the food stamp formula permitted a 4-person family earning up to $1,700 a month to claim
under $100 in food stamps and medical coverage (if the family had no child care deductions).

However, even with annual increases in allowable wages for food stamps, the number of
two-parent working families receiving food stamps dropped from 1,710 in December 1996 to
1,241 in September 1999. Two-parent families made up 21 percent of working families
receiving food stamps in December 1995 and only 15 percent of such families in September
1999. Of those two-parent working families on food stamps, an increasing percent were earning
over $1,300 per month and most of these families had medical assistance coverage.

The
number of single parent working families on food stamps increased 30 percent during 1996 while
the number earning over $1,300 per month and showing medical assistance doubled. The
number earning over $1,300 and holding MA coverage more than doubled again by December
1998 and reached 1,302 in September 1999. After 1996 the total number of one-parent working
families on food stamps declined, however, with a significant drop in the number of marginally
employed families receiving food stamps.

Families Working and on Food Stamps

On Food
Stamps

12/95

12/96

12/98

9/99

Total Working
Families

7,675

9,583

9,268

8,551

2-Parent Working
Families
With earnings over $1,300 per month
With MA and earnings over $1,300 per month

1,629

349

312

1,710

401

364

1,419

488

450

1,241

461

418

1-Parent Working
Families
With earnings over $1,300 per month
With MA and earnings over $1,300 per month

6,046

236

218

7,873

469

428

7,849

1,265

1,118

7,310

1,425

1,302

Although state Department of Revenue records show high numbers of low-income single parent
income tax filers in Milwaukee County, few new families entered the food stamp system. The
initial increase in one-parent working families receiving food stamps resulted primarily from
AFDC cases moving to food stamps and medical assistance only status, so much so that by
September 1999, 83 percent of all families on food stamps with earned income had been on
AFDC or W-2.

When Wisconsin Department of Revenue income tax records were examined for Milwaukee
County for 1998, 34,675 one-parent families showed adjusted gross income under 130 percent
of poverty, the food stamp income cutoff. Yet the December 1998 population of working one-
parent families receiving food stamps was 7,589, or only 22 percent of the estimated "working
poor" tax filers. The food stamp enrollment rate was similar for two-parent working families:
6,749 two-parent income tax filers with children reported adjusted gross income below 130
percent of poverty while 1,419 two-parent families (or 21 percent) were on food stamps. Not
only are more families eligible for food stamps but many may be eligible for medical coverage
and child care subsidies as well. By way of comparison, 87 percent of Milwaukee County single
parent tax filers and 60 percent of two-parent filers earning under $15,000 claimed the Earned
Income Tax Credit for low-income working families with children.